MAHESH SHETTY, chief manager of Karnataka Bank Limited in Ludhiana, is much sought after these days. When he is not calming down angry customers at his cash-starved branch, he is shuttling between industrial units to open accounts for hundreds of workers.

As the next payday looms, small and medium units in Punjab’s main industrial hub are scrambling to deal with a post-demonetisation “cashless” system to retain their workers. Last month, owners of many units — cycle and cycle parts to garments — paid their salaries in demonetised currency of Rs 500 and Rs 1,000. This time, with the deadline for depositing the old notes ending December 30, they are pushing their workforce into the banking system as quickly as possible so that salaries can be transferred online.

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Last week, Shetty was verifying ID documents at Findoc Impex, a medium textile unit that manufactures garments for brands such as Pantaloons, Lifestyle and Benetton. Many of the 600 workers here, mostly migrants from Bihar, have only Aadhar cards to show and hope to open accounts with a correspondence address, as they do not have a permanent address in the city.

“There is no cash to pay. So, we approached the bank to open accounts for labourers so that we can retain them,” said Vaneet Gupta, managing director, Findoc Impex. The unit, with a capacity of 3 lakh garments a month, currently has orders to manufacture 15 lakh pieces of men’s and women’s summerwear, he said.

According to industry estimates, at least 3 lakh migrant labourers have left due to the cash crunch, said Gupta.

“Many in our workforce have accounts. For the rest, we have approached Indian Bank, which recently held a camp to open accounts.
Some labourers also opened savings accounts in post offices,” said Gagan Jain, brand head, Duke Fashions (India) Limited.

Some units here have lost almost their entire workforce and cut down production.

“Before demonetisation, I had 135 workers in my factory. It took around a fortnight for many to change their demonetised notes last month. Now there are only eight workers,” said Vinod Thapar, owner of Thapar Hosiery Mills Pvt Ltd, which manufactures sweat shirts.

He said 70 per cent of the migrant workforce in Ludhiana have gone back to their home states.

“The micro and small scale industry, which comprises nearly 90 per cent of the clothing industry in Ludhiana, has been hit the hardest. Many were forced to stop production,” said Thapar.

“My unit has the capacity to make 2,000 garments a day, now it’s making less than 150. If the workforce had been available, my factory would have run at full capacity until January 10. I had orders worth over Rs 3 crore, which I will not be able to fulfill. Our skilled workers have gone back to their villages. Our salary bill was about Rs 5 lakh and it was paid in cash. With the ceiling on withdrawals now, we were able to take out only about Rs 1 lakh, and our workers left,” said Thapar.

For the workers, meanwhile, it’s a new learning curve.

“Bankon ke chakkar mein daal diya (they have made us do the rounds of banks),” said Kamarudin Ansari, a labourer standing in queue at Findoc Impex to open his account.

“This will be my first bank account. Hopefully, I will be learn how to use the account and ATM card. New things take some time to learn,” said Safayat Ansari, a worker from a village in West Champaran, Bihar.

Saffullah Miya, another migrant from the district, said that he used to deposit money earlier in the accounts of those known to him back home. “It will be good to have my own bank account now,” he said.

Shetty said the workers are already getting used to the new system.

“They are fast learners. I have seen that many who have thumb impressions on Aadhar cards have now learnt how to sign,” he said.
Outside the Mundian Kalan branch of State Bank of India, workers wait in a long queue to exchange the demonetised notes they got as salary.

“I will not accept my next salary in demonetised notes. An entire day gets wasted to deposit the money. A day’s off means a cut of Rs 400 in my salary,” said Sanjay, a migrant worker from Bihar.

For Shetty, meanwhile, the next task is to arrange cash for his branch on Millerganj Road. “We do not have adequate staff for this rush. That’s why I am here. Tomorrow, I have to go to Chandigarh to arrange Rs 40 lakh for my branch,” he said.

Yet, there is hope in this industrial town that the migrant workers will return. “This is a temporary migration. They are in the process of returning as factories are beginning to get bank accounts opened,” said Pawan Sharma, regional sourcing manager, Westside.

“This is a transition period. Labourers are returning as manufacturers are bringing them into the banking system,” said Dinesh Arora, owner of a cloth-manufacturing unit.

The author should do some math. This guy Thapar is paying 5 lakh to 135 worker in a month, that is about 3,500 per worker per month. That is about Rs 120 per day which is less than minimum wages. Minimum wages in Punjab per month is about Rs. 9,000. That is why these guy want to pay in cash. No record.